Energy price hike affecting small businesses negatively – SMEDAN

The Small and Medium Enterprises Development Agency of Nigeria has said that the rise in energy costs, particularly electricity and petrol, has posed a big challenge to small businesses in Nigeria.

SMEDAN added that increased costs directly impact production costs, transportation expenses, and overall operational efficiency.

The Director-General of SMEDAN, Charles Odii, disclosed this in an exclusive interview with The PUNCH in Lagos.

He announced that to address the challenges, SMEDAN is working with state governments to remodel and establish industrial clusters and work hubs.

“The rise in energy costs, particularly electricity and petrol, has posed quite a challenge to small businesses in Nigeria. These increased costs directly impact production costs, transportation expenses, and overall operational efficiency.

“To address this challenge, SMEDAN is taking several steps. We are working with state governments to remodel and establish industrial clusters and work hubs,” Odii stated.

According to him, these facilities offer SMEs discounted access to essential resources, including affordable electricity and shared machinery.

Odii added that SMEDAN is also advocating for business-friendly policies at the state level, urging governments to eliminate unnecessary taxes and streamline regulations to create a more conducive environment for the growth of SMEs.

He said that SMEDAN has instituted a ranking system to reward responsive states and encourage adopting positive governance reform ideas and initiatives.

Speaking further, he stressed that SMEs increasingly leverage the government’s Compressed Natural Gas drive to reduce energy costs adding that the shift towards cleaner and more affordable fuel offers numerous opportunities for SMEs.

He emphasised one significant opportunity lies in the reduced mobility costs for goods highlighting that by adopting CNG-powered vehicles, SMEs can substantially reduce their transportation expenses and improve their bottom line.

Odii mentioned that SMEs are capitalising on the growing demand for CNG conversion services.

“By investing in conversion centers, they can provide essential services to consumers and generate substantial profits. We are supporting them to do this, leveraging partnerships,” Odii explained.

“Furthermore, the CNG value chain presents opportunities for skilled labor. SMEDAN is actively working to develop the technical skills of young Nigerians, enabling them to join the workforce as technicians and contribute to the growth of the CNG industry. By adopting successful models from countries like India, our goal is to create a thriving CNG ecosystem in Nigeria,” he added.

On the Federal Government’s tax waiver for small businesses, Odii averred that the existing tax waivers are indeed very beneficial.

He stated that the implementation of an expansion of these waivers is about to commence adding that the tax threshold has been raised, providing more financial flexibility for SMEs.

“The Taiwo Oyedele Presidential Committee on Tax Reforms and Fiscal Policy has done a great job devising strategies to streamline taxes and reduce the burden on small businesses. The government’s approach is focused on enabling growth and avoiding stifling regulations,” he said.

He, however, said that the National Council on SMEs is actively working to ensure that federal policies are adapted and implemented at the state level, maximizing their impact on businesses across the country.